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MOUNTAIN BANK HOLDING CO
10QSB, 2000-11-13
NATIONAL COMMERCIAL BANKS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-QSB

/x/		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2000
or
/ /		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission file number 0-28394

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MOUNTAIN BANK HOLDING COMPANY
(Exact Name of Small Business Issuer as Specified in Its Charter)

501 Roosevelt Avenue
Enumclaw, Washington 98022
(Address of Principal Executive Offices)

(360) 825-0100
(Issuer's Telephone Number, Including Area Code)

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    Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes /x/  No / /

    State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 1,872,422 (September 30, 2000)

    Transitional Small Business Disclosure Format: Yes /x/  No / /

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PART I—Financial Information

Item 1.  Financial Statements

    The following Consolidated Financial Statements are presented for the Registrant, Mountain Bank Holding Company, and its wholly owned subsidiary, Mt. Rainier National Bank.

		Page
Consolidated Balance Sheets as of September 30, 2000, and December 31, 1999		1
Consolidated Statements of Income for the nine months and the three months ended September 30, 2000 and 1999		2
Consolidated Statements of Shareholders' Equity for the nine months ended September 30, 2000 and 1999		3
Consolidated Statements of Cash Flows for the nine months ended September 30, 2000 and 1999		4
Notes to consolidated financial statements		5
PART II—Other Information
Item 6 Exhibits and Reports on Form 8-K		7
Signatures		7

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MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)

				September 30, 2000			December 31, 1999
				(in thousands)
Assets
	Cash and due from banks			$	3,246		$	3,240
	Federal funds sold and interest bearing deposits in banks				1,792			3,563
	Securities available for sale				23,654			27,043
	Loans held for sale				335			294
	Loans				63,623			54,051
	Less allowance for possible credit losses				(657	)		(607	)
	Loans, net				62,966			53,444
	Premises and equipment				3,433			3,345
	Accrued interest receivable and other assets				1,026			812
	Total assets			$	96,452		$	91,741
Liabilities
	Deposits:
		Non-interest bearing		$	14,941		$	14,678
		Savings and interest-bearing demand			36,326			37,526
		Time			33,716			29,042
	Total deposits				84,983			81,246
	Long-term debt				41			42
	Other borrowed money				—			—
	Accrued interest payable and other liabilities				404			291
	Total liabilities				85,428			81,579
Shareholders' Equity
	Common stock—no par value; authorized 10,000,000 shares; issued and outstanding: 2000—1,872,422 shares; 1999—924,013 shares				936			924
	Paid-in capital				6,845			6,785
	Retained earnings				3,391			2,703
	Accumulated other comprehensive loss				(148	)		(250	)
	Total shareholders' equity				11,024			10,162
	Total liabilities and shareholders' equity			$	96,452		$	91,741

1

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MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

				Three Months Ended September 30,						Nine Months Ended September 30,
				2000			1999			2000			1999
				(in thousands, except per share data)						(in thousands, except per share data)
Interest Income
	Loans			$	1,522		$	1,175		$	4,355		$	3,428
	Securities available for sale				358			91			1,115			237
	Federal Funds sold and interest bearing deposits				9			387			42			1,143
	Total interest income				1,889			1,653			5,512			4,808
Interest Expense
	Deposits				735			590			2,070			1,754
	Other borrowed money				31			—			31			—
	Note payable				—			1			2			3
	Total interest expense				766			591			2,103			1,757
Net interest income					1,123			1,062			3,409			3,051
Provision for credit losses					(9	)		—			(49	)		—
Net interest income after provision for credit losses					1,114			1,062			3,360			3,051
Noninterest income
	Service charges on deposit accounts				133			125			397			360
	Origination fees and gains on loans sold				60			20			115			86
	Gain (losses) on sales of securities available for sale				—			—			(3	)		1
	Other				58			51			175			140
	Total noninterest income				251			196			684			587
Noninterest expense
	Salaries and employee benefits				593			519			1,666			1,549
	Occupancy and equipment				166			174			451			464
	Other				282			299			889			918
	Total noninterest expenses				1,041			992			3,006			2,931
Income before income taxes					324			266			1,038			707
Income taxes					(111	)		(93	)		(350	)		(208	)
Net income				$	213		$	173		$	688		$	499
Per share data:
	Basic earnings per share			$	0.11		$	0.09		$	0.37		$	0.27
	Diluted earnings per share			$	0.11		$	0.09		$	0.35		$	0.26
	Weighted average number of common shares outstanding, including dilutive stock options				1,962,226			1,952,148			1,956,379			1,945,572
Return on average assets					0.91	%		0.79	%		0.98	%		0.76	%

2

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MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

			Common Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income/(Loss)			Total
Balance at December 31, 1998			$	907		$	6,694		$	1,999		$	91		$	9,691
Sale of common stock under employee stock purchase plan				2			17			—			—			19
Exercise of stock options				8			34			—			—			42
Comprehensive income:
	Net income			—			—			499			—			499
	Other comprehensive loss, net of tax:
	Change in unrealized loss on securities, net of reclassification adjustment												(218	)		(218	)
Comprehensive Income																281
Balance at September 30, 1999			$	917		$	6,745		$	2,498		$	(127	)	$	10,033

			Common Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income/(Loss)			Total
Balance at December 31, 1999			$	924		$	6,785		$	2,703		$	(250	)	$	10,162
Sale of common stock under employee stock purchase plan				1			14			—			—			15
Exercise of stock options				11			46			—			—			57
Comprehensive income:
	Net income									688			—			688
	Other comprehensive loss, net of tax:
	Change in unrealized loss on securities, net of reclassification adjustment												102			102
Comprehensive Income																790
Balance at September 30, 2000			$	936		$	6,845		$	3,391		$	(148	)	$	11,024

3

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MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

				Nine Months Ended September 30,
				2000			1999
				(in thousands)
Net income				$	688		$	499
Adjustments to reconcile net income to net cash provided by operating activities:
	Provision for credit losses				49			—
	Depreciation				253			295
	(Gain) losses on sales of securities available for sale				3			(1	)
	Amortization, net of accretion				34			87
	Gain on loans sold				(115	)		(86	)
	Originations of loans held for sale				(5,561	)		(4,758	)
	Proceeds from sales of loans				5,635			5,401
	Other				(154	)		(50	)
Net cash provided by operating activities					832			1,387
Cash Flows from Investing Activities
	Net decrease in Federal funds sold and interest bearing deposits				1,771			4,469
	Purchase of securities available for sale				(1,013	)		(13,405	)
	Proceeds from maturities and sales of securities available for sale				4,520			9,209
	Increase in loans, net of principal collections				(9,571	)		(4,420	)
	Proceeds from disposition of premises and/or equipment				—			14
	Additions to premises and equipment				(341	)		(393	)
Net cash used in investing activities					(4,634	)		(4,526	)
Cash Flows from Financing
	Net increase in deposits				3,737			3,689
	Repayment of note payable				(1	)		(1	)
	Common stock sold				72			61
Net cash provided by (used in) financing activities					3,808			3,749
Net increase in cash					6			610
Cash and due from banks
	Beginning of period				3,240			3,369
	End of period			$	3,246		$	3,979
Supplemental Disclosures of Cash Flow Information
	Interest paid			$	2,021		$	1,778
	Income taxes paid			$	350		$	345
Supplemental Schedule of Non-Cash Investing and Financing Activities
	Fair value adjustment of securities available for sale, net of tax				102			(218	)

4

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1—Basis of Presentation

    The unaudited consolidated financial statements include the accounts of Mountain Bank Holding Company (the Company) and its wholly owned subsidiary, Mt. Rainier National Bank (the Bank). The consolidated financial statements have been prepared in conformity with generally accepted accounting principles for interim financial information and with general practice within the banking industry. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Significant intercompany transactions and amounts have been eliminated. In the opinion of management, all adjustments (consisting only of recurring accruals) necessary for a fair presentation are reflected in the financial statements. Reference is hereby made to the notes to consolidated financial statements contained in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999. The results of operations for the nine months ended September 30, 2000, are not necessarily indicative of the results which may be obtained for the full year ending December 31, 2000.

Note 2—Stock Split

    On March 28, 2000, the Board of Directors announced a two-for-one stock split payable to shareholders of record as of April 10, 2000. In connection with the stock split, the par value of the Company's common stock was changed from $1.00 per share to no par value and the number of authorized shares was increased from 5,000,000 to 10,000,000. The number of shares outstanding at September 30, 2000, and the average share and per share information for the periods ended September 30, 2000 and 1999, have been adjusted to show the effect of this stock split.

Note 3—Earnings Per Common Share

    Basic earnings per share are based on the average number of common shares outstanding, assuming no dilution. Diluted earnings per common share are computed assuming the exercise of stock options. All share amounts have been adjusted to show the effect of the two for one stock split discussed in Note 2.

			Net Income (Numerator)			Shares (Denominator)		Per Share Amount
Nine months ended September 30, 2000
Basic earnings per share:
	Net Income		$	688		1,854,677		$	0.37
Effect of dilutive securities:
	Options			—		101,702			(.02	)
Diluted earnings per share:
	Net Income		$	688		1,956,379		$	0.35
Nine months ended September 30, 1999
Basic earnings per share:
	Net Income		$	499		1,822,784		$	0.27
Effect of dilutive securities:
	Options			—		122,788			(.01	)
Diluted earnings per share:
	Net Income		$	499		1,945,572		$	0.26

5

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Note 4—Pending Stock Offering

    On September 22, 2000, the Company filed a registration statement with the SEC, as amended on October 30, 2000 and November 6, 2000, in connection with the proposed offer and sale of up to 75,000 shares of its common stock at $11.00 per share. The offering is expected to be completed by year-end and will be made to existing shareholders first on a pro rata basis and then to the general public.

6

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Item 6.  Exhibits and Reports on Form 8-K

(a)

Exhibits:

27

Financial Data Schedule

(b)

Reports on Form 8-K:

None

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SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		MOUNTAIN BANK HOLDING COMPANY (Registrant)
Dated: November 10, 2000		/s/ ROY T. BROOKS    Roy T. Brooks, President and Chief Executive Officer
Dated: November 10, 2000		/s/ SHEILA BRUMLEY    Sheila Brumley, Chief Financial Officer

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PART I—Financial Information

Item 1. Financial Statements

Item 6. Exhibits and Reports on Form 8-K

SIGNATURES

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